Saturday, May 28, 2011
8:33:43 PM EDT

Circuit Boards & Services

by
James Brown

The market's major indices are down four weeks in a row. Yet I found more bullish candidates than bearish ones. There are so many people expecting a deeper correction the market might rise just to spite them. If you are interested in bullish trading ideas check out this list of stocks I'm watching:

Why We Like It:
Tech stocks have been seeing lower highs and lower lows the last few weeks. Just the opposite is true for JBL. Shares are climbing in a bullish channel of higher lows and highs. The recent bounce from $20.00 looks like a bullish entry point. Shares do still have overhead resistance near $22 but if this trend continues we should see JBL breakout past this level in the next week or two.

I am suggesting small bullish positions now. We only have about four weeks for this trade to work as JBL reports earnings on June 21st and we don't want to hold over the announcement.

- Use Small Positions -

Suggested Position: buy JBL stock @ current levels

- or -

buy the July $22 call (JBL1116G22) current ask $0.95

Annotated chart:

Entry on May 30 at $xx.xx
Earnings Date 06/21/11 (confirmed)
Average Daily Volume: 3.6 million
Listed on May 28th, 2011

NEW BEARISH Plays

H&R Block - HRB - close:

Stop Loss: 16.55
Target(s): 14.10
Current Gain/Loss: unopened
Time Frame: until June 23rd, 2011
New Positions: Yes, see trigger

Why We Like It:
There were a lot of headlines in HRB's corner of the world last week. Rival Jackson Hewitt Tax Service filed for bankruptcy. The Department of Justice has failed an antitrust lawsuit against HRB and its plans to acquire TaxACT. Meanwhile HRB declared a 15-cent quarterly cash dividend. Looking at the stock shares of HRB appear to be correcting lower. Shares spent a month failing at resistance near $18 in April. Since then HRB has bounced from its early May sell-off but the bounce has stalled under resistance at its 50-dma. The action in the past two weeks looks like a bear-flag pattern. I am seriously tempted to launch positions now. However, HRB has not yet broken the new trend of higher lows (bottom of the bear flag).

I am suggesting a trigger to open bearish positions at $15.60, which is under last week's low. More conservative traders may want to wait for a breakdown under the rising 100-dma, which could act as possible support. If we are triggered at $15.60 our target is $14.15 near the 200-dma.

Trigger @ 15.60

Suggested Position: Short HRB stock @ $15.60

- or -

buy the July $15.00 PUT (HRB1116S15) current ask $0.65

Annotated chart:

Entry on May x at $xx.xx
Earnings Date 06/23/11 (confirmed)
Average Daily Volume: 5.8 million
Listed on May 28th, 2011